Nortel slashes more jobs

Demand for fibre-optic kit flat as the Canadian plains

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Nortel Networks has issued a profits warning and announced it plans to slash 10,000 jobs from its workforce.

The old US economy slowdown is reducing demand for its products.

The Canadian firm said it expects growth in revenues in its first quarter this year to be 15 per cent compared to last year, this compares to previous estimates of 30 per cent growth. These sharply reduced estimates will result in revenues for its quarter to be pegged at around $6.3 billion, which Nortel admitted will result in it making a loss overall.

And further bad news lies ahead. In a statement John Roth, president and chief executive of Nortel Networks, said: "We now expect the US market slowdown to continue well into the fourth quarter of 2001."

To cope with negative market conditions, Nortel has said it will cut 6,000 more jobs this year in addition to the 4,000 reduction in headcount announced last month. Nortel said it would try to loose as many jobs as possible through natural wastage but has otherwise been very vague about where the axe will fall.

Nortel, a leading manufacturer of fibre optic kit used to build high-speed networks on the Internet, has been affected by a slowdown in demand for these products that has also had a negative effect on Lucent, and to a lesser extent Cisco. Reorganisation in the US telecoms industry and a slowdown in the economy have together produced a double whammy which has taken networking firms somewhat by surprise, and drastically shrunk their potential market. ®